Economy of Algeria

By | April 29, 2022

According to businesscarriers, Algeria ranks 5th in the world in terms of natural gas reserves, 12th in oil reserves and 2nd after the Russian Federation in terms of gas exports. Main macroeconomic indicators.
The Algerian economy consists of two parts: a prosperous one, which includes the extraction and processing of hydrocarbons, and a crisis one, which unites most of the manufacturing and other sectors of the economy. The oil and gas sector provides 95% of foreign exchange earnings, forms 60% of the state budget resources and 30% of GDP. The monopoly in this sector is the state-owned company SONATRAC. The non-oil sector is in a stagnant state. The industry operates at half the installed capacity. In the 1990s its share in GDP ranged from 8 to 10%. The stagnation in industry is combined with the backwardness of agriculture, which provides for domestic demand by 30-35%. In the structure of GDP (%, 2001): agriculture 8.1; industry 48.1; including oil and gas 40.8; construction and public works 8.6; services, transport 35.2.

In 2000, out of 8.2 million able-bodied population, 5.8 million people were employed; of which (in%): in agriculture 19.8, in industry, construction and public works 23.2, in the service sector 17.4, in management 23.5, in handicraft production – 16.1.

The unemployed make up 30% of the able-bodied population (about 2.5 million people), among young people under 30 years old – 55%.

In industry, the leading role belongs to the oil and gas industry. The average annual oil production is 62 million tons, gas is 60 billion m3, 1/3 of the oil produced and 15% of gas are consumed domestically.

Average annual mining of ore minerals: iron ore – 1 million tons (by metal content), lead – 900 tons (by metal content), phosphorites – 1.1 million, zinc and tin – 8.1 thousand tons, mercury – 14.2 thousand tons

Electricity generation is provided by thermal power plants (99%), hydroelectric power plants (1%). The capacity of all power plants is 4171 MW. The average annual production is 22 billion kWh. The manufacturing industry is represented by enterprises of the metallurgical, machine-building, oil refining, chemical, electrical, light and a number of other industries.

17% of the territory is suitable for agriculture. Agriculture provides 2/3 of all agricultural products. 4/5 of the cultivated area (7.1 million hectares) is occupied by grain crops: durum and soft wheat, oats, barley, corn, sorghum, rye. In 1991-2001, grain production amounted to 2395 thousand tons. Early vegetables are grown on the coast: potatoes, tomatoes, onions, carrots, etc., as well as melons. Of the export crops, wine and table grapes, citrus fruits, olives, and dates are cultivated. The development of animal husbandry is constrained by the state of pastures, which do not meet the need for fodder (31 million hectares). Cattle, sheep, goats, camels and horses are bred. On the high plateaus, pastoralism has a semi-nomadic character. In 1991-2001, meat production averaged 507 thousand tons, milk approx. 1 million tons. Fish catch (sardine, herring, anchovy, tuna) – 100 thousand tons.

Domestic transportation of goods is carried out by road and rail. The total length of roads is 104 thousand km, incl. with hard surface 71.6 thousand km. It accounts for 85% of domestic passenger traffic and 73% of freight traffic.

The length of railways is 4.8 thousand km. Of these, 1.1 thousand km are narrow-gauge tracks, 300 km were electrified (1998). The volume of rail traffic: freight 2082 million tkm, passenger – 2077 million pass./km.

The total length of product pipelines for the transportation of natural gas, liquefied petroleum gas, gas condensate and crude oil is 15.4 thousand km.

The internal network of main gas pipelines has a total length of 8.4 thousand km. The Transmed gas pipeline (Algeria-Tunisia-Italy) with a length of 2.6 thousand km (including 550 km in Algeria) and the Maghreb-Europe (Algeria, Morocco, Spain) – 1365 km are in operation.

The total length of oil pipelines (5.9 thousand km) allows pumping 84 million tons of oil to the coast annually. Main oil pipelines: Howud el-Hamra-Arzew, Howud el-Hamra-Bejaya, In-Amenas-Sekhira (Tunisia), Howud el-Hamra-Mesdar-Skikda.

Sea transport carries out 70% of foreign trade freight traffic (railway 20%, road 10%).

Main ports: Algiers, Arzew, Annaba, Bejaia, Oran, Mostaganem, Skikda.

The country has 136 airports, of which 51 have concrete runways. Helicopter transport is developed. Air transport carries an average of 3.5 million passengers per year (2,863 million passengers/km).

Algeria’s main international airport is Dar El Beida. International flights are accepted by 6 more airports, incl. in Constantine and Oran.

Telephone communications within the country are provided by 12 stations (in the future, the creation of 20 more), international lines – by 5 sea cables. There is radio relay communication with Italy, France, Spain, Morocco and Tunisia, 2 satellites of the Intelsat system (1 over the Indian Ocean and 1 over the Atlantic Ocean).

Radio and television stations: longwave – 25, shortwave – 8, FM band – 1; television stations – 18; internet provider – 1.

Wholesale and retail trade is 70% the scope of the private sector. The state retains a monopoly on the purchase, sale and distribution of certain types of foodstuffs, raw materials, machinery and equipment, which are handled by specialized national trade organizations. The Chamber of Commerce and Industry has been operating since 1980.

The influx of tourists is constrained by underdeveloped infrastructure and the threat of terrorist attacks from Muslim extremists. In con. 1990s the country was visited by an average of 650-700 thousand tourists. There are 737 hotels with 64,695 beds.

In con. 1980s Algeria’s economy was gripped by a deep crisis, accompanied by an increase in external debt. K ser. 1990s The country was on the verge of bankruptcy. Agreements signed with the IMF for 1995-98 made it possible to restructure the external debt ($15.2 billion) and obtain a loan to stabilize the financial situation. On the recommendation of the IMF, Algeria carried out the devaluation of the dinar, accompanied by price liberalization, the abolition of their subsidies with targeted support for poor families. At the same time, the privatization of unprofitable industrial enterprises and the banking system began. The development of private entrepreneurship and the attraction of foreign investment were stimulated, incl. and in the non-oil sector. An economic recovery plan for 2001-04 has been developed. 7 billion dollars were allocated for its implementation, incl. St. 17% for social needs.

The banking system is preparing for privatization. In addition to the Central Bank (CB), it has 11 commercial banks, incl. 2 private Algerian and 2 foreign, the competence of the Central Bank is the issue of national currency, licensing of banking activities, mobilization and storage of the country’s gold and foreign exchange reserves, etc. Central Bank reserves (million dollars, 1999): gold – 268, special drawing rights of the IMF – 2, reserve IMF fund – 117, foreign currency – 4407, total – 4794.

Since July 1999, the stock exchange has started trading.

Budget (2001, billion dollars): income – 17.9, expenses – 19.5, deficit – 1.6. The revenue part is formed by 30-35% due to proceeds from the export of oil and gas.

Public debt – 32.3 billion dollars (2001, 33.2 billion dollars in 2000).

The income of 65% of the population is below the minimum subsistence level, approx. 1 million Algerians emigrated to Western Europe.

In 2000-01, export earnings significantly exceeded import costs, due to high oil and gas prices on the world market. In 2001, export revenues amounted to 20 billion dollars, import costs – 9.7 billion dollars. In the structure of imports, 35.7% falls on machinery and equipment, 24% on food, 40.4% on raw materials, semi-finished products and consumer goods. The main export commodities are oil, gas, oil products – 97.27%. The main suppliers of imported products (%): France – 25.12, USA – 11.22, Italy – 10.52, Germany – 8.04, Spain – 5.28 and other countries – 36.22. Export flows were sent (%): to Italy – 21.6, to the USA – 14.86, to France – 13.7, to Spain – 10.17, to other countries – 40.3.

Economy of Algeria